Buy The Fucking Fire And Fury (BTFFF)
That’s how one can summarize the latest report sent out overnight by Zacks EVP and editor of the “Zacks Elite” newsletter, Steve Reitmeister whose only intention was to prevent Goldman clients from selling following the escalating war of words between Trump and Kim, and instead to boost client confidence that even though (nuclear) war may ultimately break out, it’s actually good for stocks, to wit: “The reality is that the stock market likes war and typically rises after fighting commences. Some call it a patriotic response by investors.”
That said, even this attempt to spin potential armageddon into a bullish event had to cross some moral hurdles and as a result, Reitmeister hedged, saying “to be clear, I don’t like rooting for war as a catalyst for the stock market’…. even though that’s precisely what he did, adding “there are plenty of other reasons to be bullish.” He then explains that his only purpose was for “you to have the correct view of this situation. And that is to realize these issues with North Korea should not cause any continued downside to the market.”
For the sake of Reitmeister and his market #timestamp, one hopes the nukes don’t start flying, giving Zacks’ clients – what’s left of them – ample opportunity to test out just how correct his explanation was.
His full letter below:
Stock Market Fire and Fury
The S&P made new highs Tuesday getting ever closer to 2500. Then right around noon investors got a case of high anxiety with stocks recoiling a bit, but still in profitable territory.
Just before the closing bell the real fireworks began. That came in the form of some tough talk from the White House that any North Korean aggression will be met with “Fire and Fury”.
Since this is an investment publication, we will stay focused on what this means for the market. First, we are used to a lot of bluster from North Korea with no serious action taking place. So, this likely leads to nothing and investors ignore the situation.
Now let’s imagine that military action does take place. North Korea is a paper tiger that is easily toppled. (Heck, if you gave me a month with nothing to do, I likely would have a more impressive military arsenal than they do and feed the people and keep the electricity running….but that is beside the point 😉 The reality is that the stock market likes war and typically rises after fighting commences. Some call it a patriotic response by investors.
To be clear, I don’t like rooting for war as a catalyst for the stock market. There are plenty of other reasons to be bullish. I just want you to have the correct view of this situation. And that is to realize these issues with North Korea should not cause any continued downside to the market.